What should I do with my investment in Reliance Tax Saver fund?
Dhirendra Kumar talks about the recent underperformance of Reliance Tax Saver Fund and whether any change in the AMC's ownership would impact the fund
Jun 10, 2019
I am a senior citizen and have been investing in Reliance Tax Saver for the last four years. My total amount invested, which should have been around six lakh, is now only around 5.70 lakh. I have already discontinued my SIP in it and have started investing in Mirae. But please suggest what I should do with the accumulated money in Reliance Tax Saver. Also, I have heard that Reliance is getting out of the AMC business. How will it impact the fund?
In a way, both the questions are not connected. A few years ago, the company became Reliance Nippon Asset Management and thereafter, it went public. But now, Reliance will be out of it and they have already signed a binding agreement with Nippon. So, it will become a dominantly owned company by Nippon. Nevertheless, this has little to do with the performance of the fund, as a company's ownership change and the management of individual funds are two different areas.
Reliance Tax Saver has been a disappointing fund. It built its name based on the kind of portfolio it had. Although it's a tax-saving fund, it is oriented towards small and mid caps. But it has now become fairly big, which is not very good for a small- or mid-cap fund. Usually, small-cap funds do well after two-three years and before that, they turn out to be very disappointing.
You don't have much to do here. Out of your last four year's investments, only the first year's investment will be out of the lock-in period, since these investments have a lock-in of three years. So, now that you have to hold it for three years, I am hopeful that by the time your investment is out of the lock-in period, it will not be as disappointing as it is now.